The Bank of England (BoE) is currently testing local banks' ability to cope with any probable economic fallout in the event of troubles in the Chinese economy.

“Credit growth in China continues to materially outpace GDP growth, and the level and growth of credit relative to GDP in China are very high by international standards,” the BoE warned. Beijing expects the economy to grow 6.5-7 percent this year.

"Capital inflows into emerging market economies have resumed in recent months, loosening credit conditions and risking a further build-up of vulnerabilities, which could leave some countries at risk of a tightening in financial conditions," added the bank.

According to Nomura research, since the global crisis of 2008 Chinese firms have more than doubled the percentage of income they spend on servicing debts to 20 percent, the highest in the world. By comparison, US, Japanese and Korean firms have been cutting the share of income that goes to debt service since the crisis.

Recent research by the Bank for International Settlements in Basel, quoted by Business Insider, shows the Chinese loan bubble is getting dangerous. China's credit-to-GDP deficit is now 30.1 percent, its biggest number since 1995.

"While it is difficult to quantify 'excessive credit' precisely, the credit-to-GDP gap captures this notion in a simple way. Importantly from a policy perspective, large gaps have been found to be a reliable early warning indicator of banking crises or severe distress," the researchers said.